Supply Chain Risk Strategy Of Rolls Royce Aerospace Management Essay

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The objective of this research is to understand and critically evaluate the existing supply
chain risk strategy of Rolls Royce Aerospace Company. Analyse and evaluate whether an
alternative or best method of practice of supply chain risk management can be
implemented for Rolls Royce Aerospace Company. This chapter reveals the nature and
scope of research, its methodology selection, the limitations of this research, the data
collection method, whether the data collection is quantitative or qualitative, and last its
ethical considerations with respect to this research study and Rolls Royce confidential
data.
The research questions are: critically evaluate the supply chain risk management
strategy of Rolls Royce, analyse various factors influencing the supply chain risk
management, analysing the best practices of supply chain risk management and
comparing with existing risk strategy of Rolls Royce. The research is based on the
critical analysis of the existing supply chain risk strategy of Rolls Royce Aerospace.
Analysing and comparing the existing supply chain risk strategy with other best
methods of practice by various companies handling supply chain risk management.
Here is a brief overview of Rolls Royce profile.

Overview of Rolls Royce:

Rolls Royce is a world's leading provider in power systems and services for civil and
defence aerospace, marine and energy and has established a strong market position
globally (Rolls Royce, 2010). This research is focussed on Rolls Royce aerospace
division's supply chain risk management. Rolls Royce Aerospace division basically deals
in manufacturing engines for aircrafts in both the sectors of civil and defence aerospace,
the supply chain of Rolls Royce is complex and managing is a difficult task. Over last
decade Rolls Royce has been focussing on its supply chain and their relationships with
suppliers to stand out in the competitive market (Tiwari, 2005). Rolls Royce today has a

huge customer base of more than 600 airliners, 4000 corporate and utility jets,
helicopter operators and 160 armed forces (Rolls Royce, 2010).
Rolls Royce market outlook forecast demands for 141,000 engines worth more than
$820 Billion. Rolls Royce sees opportunity for growth in commercial aerospace sector
with continuous need for air transportation by various business sectors and individuals
(Rolls Royce, 2009). Rolls Royce manufactures aircraft engines and this segment of the
industry is divided into three components, turbofan, turbo shaft and turboprop.
Turbofan commands the majority of the total engine demand. Turbofan is used in the
manufacture of commercial and military aircrafts. Turboprops are used for corporate
jets, regional airliners and for military purposes, the last component turbo shafts are
used for helicopters, vertical takeoff jets, landing aircrafts (Tiwari, 2005). These
components are used for both civil and defence aerospace sectors. Civil aircrafts such as
Trent series, especially large aero engines have a great demand in new generation wide
bodied aircrafts (Rolls Royce, 2009). Defence aerospace hold a commanding position
with aircrafts such as STOVL, Combat, Light Attack, Maritime Reconnaissance, F-35
joint strike fighter aircrafts and Euro Fighter Typhoon (Hughes, 2003).
Managing uncertainty in civil and defence aerospace supply chain industry has become
a challenging task for Rolls Royce. Operating successful supply chain with a complex
and extended chain of partners and suppliers, those with longer lead time products and
extreme variability of supply and demand has become complicated and difficult to
manage. Rolls Royce understands the importance of extended supply chain, the supply
chains which are extended with lots of partners, suppliers, sub suppliers, manufacturers
are termed as extended supply chains and also known as value chains. Rolls Royce
manufactures 30 percent of gas turbines and the remaining products are manufactured
by their external network of risk sharing partners and suppliers. Rolls Royce and their
external supplier and partner made a commitment to manage and coordinate supply
chain and their key components in the link. Newview, a company providing solutions for
supply chain developed a new system known as network resource management
(Newview, 2010). "Network resource management (NRM) provides the ability for
companies to programmatically reconnect their finished goods demand to the parts,
materials, capacities and operations that represent significant risks and cost driver.
Provides a secure means of multi-enterprise collaboration between stakeholders"
(Newview, 2010).

Nature and scope of research:

The research process consists of exploring the existing case studies of the supply chain
risk management of Rolls Royce. Rolls Royce supply chain risk strategy known as
Earlier Supplier Involvement (ESI), involves the suppliers, sub suppliers and partners in
every stage starting design process, improving the design till the completion of product
development (Zsidisin & Smith, 2005). According to Zsidisin & Smith (2005), adoption
of the method of early supplier involvement has benefitted many supply chains.
However there are several drawbacks and negative aspects towards this approach, this
method cannot be defined as a good risk management, there are issues with the supply
chain disruption, however early supplier involvement does not reduce risk in supply
chain disruptions. In an extended supply chains of Rolls Royce there are issues of
ownership and trust, more over Rolls Royce is only focussed on early supplier
involvement. This research critically evaluates the existing supply chain risk strategy of
Rolls Royce. Analyse and compare with other risk strategies, best methods of practice
implemented in other companies. This research process is known as interpretive
approach, interpreting existing knowledge, critically evaluating with an understanding
of social realities of the research study (Thietart et al 2001). According to Thietart et al
(2001), researchers are inspired from the three major research paradigms which
represent the epistemological streams of organizational science. Paradigm term can be
defined as a scientific practice of people's perceptions towards philosophies and
assumptions about the world and nature of knowledge (Hussey & Hussey, 1997).
Organizational science is the assumptions of people given when exploring, discovering
nature of organizations with paradigm objectives (Gioia & Pitre, 1990). The three
research paradigms are known as positivist, interpretivist and constructivist. Positivists
are always dominant and their nature of reality is made up of determinist hypothesis,
they only deal with facts and figures (Thietart et al, 2001). The positivist analyse facts,
figures and causes of social phenomena, based on laws the phenomena is explained,
predicted and controlled, logical reasoning is applied to the research. Positivist sees
reality a concrete structure and perceives reality as concrete process (Hussey & Hussey,
1997). "There has always been a conflict between positivist and interpretivist which
defends the particularity of human science in general and organizational science in
particular" (Thietart et al 2001:14). According to Alvesson & Deetz (2000), positivists
are described as methodological determinist and functionalist practicing the laws of
theory and applying variable analytic traditions in research. Interpretivist sees reality as
social construction (Hussey & Hussey, 1997). Reality is mental and perceived which is

known as phenomenological hypothesis, their goal is to understand knowledge social

reality rather than discovering and underlying laws, they develop an understanding of
social reality experienced by the subject of the research study (Thietart et al, 2001). In
interpretive approach the researchers perception on organization is a social site where
special type of communities share important characteristics with other different
communities and more over they are focussed on social perspectives rather than
economic perspectives of the organizations (Alvesson & Deetz, 2000). The
phenomenological hypothesis or paradigm is known as understanding the human
behaviour from participant's perspective of reference. Phenomenon is basically defined
as a fact or an occurrence of act, or the act which is perceived (Hussey & Hussey, 1990).
The constructivist creates the knowledge and reality in minds, they don't perceive on
real world, the observation is dependent on the observer with respect to data, the laws of
nature as well as external objects (Thietart et al, 2001). Positivists on the other hand are
ontology independent. This means their reality is singular and objective, knowledge has
its own essence and moreover researcher is independent of the research. Ontological
assumption means whether an individual decides and considers world as an object and
external to the researcher (Hussey & Hussey, 1990). Interpretivists are
phenomenologist, their nature of reality is phenomenology interactive, and knowledge is
validated through experience (Thietart et al, 2001). Phenomenologist's are the ones who
try to bridge the gap between the research and researcher, they are more involved
interaction with research, interpretivist reality is subjective and multiple, interpretivist
understanding nature is by developing theories (Hussey & Hussey, 1997). Interpretive
researchers usually debate on their assumptions and theories whereas positivists lack
theory driven research (Alvesson & Deetz, 2000). Interpretive research is based on
people's perception that socially and symbolically constructs and sustains their own
realities of organization (Gioia & Pitre, 1990).

This research is clearly based on interpretive approach, a detailed analysis and

evaluation of multiple case studies of the supply chain risk strategy of Rolls Royce which
is also known as grounded theory (Thietart et al, 2001). Grounded theory is also an
interpretive method which share similar philosophy of phenomenology. It describes the
individuals under study. It is defined as a systematic approach which develops an
inductive grounded theory about the phenomenon. The research findings derive the
theoretical formulation and reality is based on investigation rather than comprising of

numbers and vague themes. The generated theory is based on observations. The
intention is to recommend ideas, policies with theories which can likely be used when
studying and evaluating similar situations (Hussey & Hussey, 1997).

Data collection:
The data collected is multiple case studies of the supply chain risk of Rolls Royce, an
existing research is done on supply chain risk strategy of Rolls Royce. Company's annual
reports, published news articles, conference boards and success stories with respect to
supply chain risk management. This research analysis is based on qualitative approach
thereby critically evaluating the existing supply chain risk implementation. Qualitative
analysis can be defined as a subjective approach towards examining and reflecting on
various perceptions, to develop an understanding of social and human actions (Hussey
& Hussey, 1997). Examining the perspective of others rather than prioritizing the
concerns of researcher and interpreting observations from subject's perception
(Bryman, 1989).
The actual research is doing a detailed analysis on multiple case studies of Rolls Royce
supply chain risk management with other data such as company's annual reports, news
articles. Critically analysis and evaluating implementation of Rolls Royce supply chain
risk, analysing and finding the major drawbacks in this risk management approach,
comparing with other best practices of supply chain risk in industry. Moreover this
research is based on interpretive approach. Rolls Royce is only focussed on their best
practice known as early supplier involvement in supply chain to avoid risk, this involves
the suppliers and partners during the product design, in order to reduce the duration of
the design process and improve the design outcome (Zsidisin and Smith, 2005). There
are drawbacks and limitations to this risk strategy and there are other major factors
effecting and influencing the supply chain risk like social, political, environmental and
most important issues of ownership in organizations with respect to suppliers and sub
suppliers as well as the ones who outsource, lack of ownership in supply chain is very
serious as it could create problems in supply chains due to their longer and complex
structure, this lack of ownership is one of the major drawback with Rolls Royce supply
chain. Research would be carried out on these drawbacks and analyse how to neutralise
threats and control these factors which result in supply chain disruption. According to
this research study there are other best methods of risk strategy in supply chain as
stated above in methodology. One among them is the Ericson's supply chain risk

approach, this approach describes how the sub supplier's fire accident had a huge
impact on Ericson's supply chain and on its over all business, the organization
implemented new strategy, the risk management process includes as usual identification
of risk, assessing risk, mitigation of risk and added steps known as risk monitoring,
concurrently to this process the company also initiated two other processes known as
incident handling and contingency planning. Insurance companies had a positive
attitude towards this improved risk management strategy (Norrman &Jansson, 2004).

Limitations of research:
The research is conducted based on the multiple case studies. Rolls Royce data is
confidential and some are highly classified with respect to defence aerospace. The data
collected is through sources available in internet, the case studies of supply chain risk
management pertaining to Rolls Royce, the company's annual reports, their published
news articles. The research done here is an interpretive approach as stated earlier,
initially the research was design to conduct in a positivist approach, but the primary
data of Rolls Royce was not available for a research student, since the data is
confidential data as stated. The research had to be modified due to non availability of
primary data and hence opted to interpretive approach, more over as a research student
analysing primary data of Rolls Royce would have been a quantitative approach and it is
a difficult task to analyse and evaluate the data of Rolls Royce especially that of supply
chain which is extensive. This is one of the major limitations to the research. The
secondary data is accessible and much of the data is available which includes case
studies, company's reports. Supply chain is complex, difficult and most demanded in
today's industries, this research study is carried out in order to understand the
requirements and the need for supply chain risk management among industries, Rolls
Royce is one of the good cases to analyse supply chain risk management and gain an
insight on the theoretical foundations risk management, this research enables to
understand the practicality of supply chain risk management in industries. Since
interpretive approach is used in this research, much of the secondary data is available to
support the validity of the argument. This research can only critically evaluate but
cannot suggest or implement a new strategy. Hence the research restricts itself. When
contacted with Rolls Royce officials regarding data and information they denied stating
its highly confidential and cannot be outsourced even for university or student purposes,
when requested for interviews or formal discussion that could have devised a
questionnaire they again denied stating top seniors officials are extremely busy and high

influential to research and middle management are not allowed to give such interviews.
Due to constrained resources, the nature of actual supply chain risk of Rolls Royce
cannot be derived.

Ethical considerations:
Supply chain risk management is complex and difficult to understand. As a research
student providing a valid argument pertaining to research with a chosen interpretive
approach is difficult. Doing research in supply chain risk from industry perspective is a
difficult task; there are time constraints, resource constraints to gain a deeper
understanding to supply chain risk. The risks are highly unpredictable and the research
cannot determine the evaluation of risk strategy to perfection nor implement a new risk
strategy, because risk in supply chains are always unlikely and always new issues rise
when existing ones are reduced or controlled. As a researcher understanding the
philosophy of supply chain risk is essential and time constraint is a key priority.
Reflecting one's own view based on various perceptions of others is a difficult task.